Mortgage lending is set to increase returning the housing market to sustainability. Including remortgage.

The optimistic forecast was made by top boffins at the Centre for Economics and Business Research - a highly regarded think tank.

Its research showed that house prices are now expected to grow by 16 per cent over the next four years.

The rise will return property to its glorious 2007 finest and will mean the average property could be worth £30,000 more.

The predictions are made on the expectation that banks will relax the rules on giving out mortgages.

The difficulty in first time buyers getting mortgages has been a major obstacle in getting the mortgage and remortgage markets back to their pre-crash best.

Although the experts believe house prices will fall during the rest of 2011, from the start of next year they expect prolonged growth.

The think tank calculated that the average property price across the country is now £175,000.

It expects that by 2015 that figure will have risen to £205,643.

This will be the result of a four per cent year-on-year growth, it claims.

Douglas McWilliams, from the Centre for Economics and Business Research, said: "The main factor driving house prices up is the shortage of available housing which has already pushed up rents.

"Housing completions fell to only 130,000 in 2010, well below the level required to keep pace with demographic change.

"But the factors that will ultimately drive house prices up again are the loose monetary policy that will accompany the Government's deficit reduction and the ability of banks to lend again on consumer-friendly terms as their own underlying financial position improves.

"This should not be confused with boom and bust. We are forecasting a gradual four-year recovery at an annual rate of about four per cent."

Max Erskine from remortgagenow.co said: "This is quite wonderful news - if it plays out.

"Predicting so far ahead is not foolproof, and I don't expect the brains at the think tank would claim as much.

"But at the same time they don't want to look like idiots and would not predict a house price rise and improved mortgage market unless they believed it.

"Their report was also based on the belief that the housing market was about as bad as it could get so there was only one way it could go - up.

"While the outlook is gloomy for the rest of this year it is set to pick up after Christmas.

"To really get things going in the mortgage and remortgage markets, first-time buyers need to be encouraged.

"If banks do make it easier for people to get on the property ladder then I can certainly see these predictions coming true.

"And if house prices do rise, remortgage deals will become more popular as home owners will find more equity in their properties."